Oregon Attorney Could Win Millions from SAIF Measure

June 15, 2004

A proposed ballot measure for the November elections that would dismantle the public company that provides worker compensation insurance could make millions for a Portland attorney and his law firm.

Call it the DiLorenzo clause.

John DiLorenzo, a prominent lobbyist and lawyer at Davis Wright Tremaine, has mounted a tenacious battle against the State Accident Insurance Fund Corp., or SAIF.

DiLorenzo has pried loose thousands of documents from SAIF. He also inserted a section into an initiative filed by SAIF’s private-sector rival, Liberty Northwest, that grants special privileges to his client.

Liberty, SAIF’s chief competitor in Oregon’s $724 million-per-year workers’ compensation industry, wrote an initiative that would dismantle SAIF and siphon off half of its “excess surplus” to public schools, health care for the needy, job training and local law enforcement.

Liberty officials and other critics estimate that SAIF has several hundred million dollars of excess money stashed away.

Spending half of that on public services sprinkled around the state could broaden the appeal of Liberty’s ballot measure.

The other half of the “excess surplus” would go to satisfy a legal claim filed on behalf of SAIF policyholders when the initiative was filed.

That claim was filed by DiLorenzo, who hopes to turn it into a class-action lawsuit on behalf of all SAIF policyholders _ about 46,200 Oregon businesses, governments and nonprofits. Only one claim fits the description in the initiative, and that’s DiLorenzo’s, said Mike Mueller, SAIF vice president for legal affairs.

If a court rules that there is $500 million to $600 million in excess surplus in SAIF’s $2.8 billion in assets, about half of that could go back to policyholders, DiLorenzo said.

“If we prevail in the lawsuit, every single SAIF policyholder would benefit,” he said.

DiLorenzo could also benefit.

It’s not known what percentage DiLorenzo and his law firm would collect in legal fees if he prevails on a class-action suit.

One precedent is a lawsuit filed on behalf of SAIF policyholders after the Legislature spent $80 million of SAIF’s reserves in an early-1980s budget crisis. SAIF policyholders eventually won $225 million, including interest. Their attorneys earned $20 million in legal fees.

“How flagrantly self-serving is that?” Salem gasoline retailer and City Councilor Brent DeHart said when he was told about the DiLorenzo clause.

As a SAIF customer, DeHart stands to get a rebate. But he opposes the Liberty initiative. “Every employer in Oregon will pay higher workers’ comp rates if SAIF is eliminated,” DeHart said. “So how is that good?”

Copyright 2004 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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